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Distribution: weekly

  • Perils of profits based economic recovery

    The economies across the world are showing recovery driven by profits. However, one cannot neglect the implication of such recovery for the long term growth given the pressure such recovery has been exerting on the labour markets. The article deals with this issue.

    3 Ways to look at GDP

    • The first is what they tell us about the past.
    • Here, the news has generally been better-than-expected.
    • The US and India saw a much stronger recovery last quarter than previously envisioned.
    • The second is sectoral, production side-agriculture, manufacturing, services- and the functional, expenditure side consumption, investment, net exports.
    • But there’s a third way — the income side.
    • Value addition must ultimately accrue to the different factors of production.
    • On the income side, therefore, GDP is simply the sum of profits, wages and indirect taxes.

    Profit-driven growth and impact on employment

    • The economic recovery in many parts of the world is driven disproportionately by capital than labour.
    • In India, the net profits of listed companies grew 25 per cent (in real terms) last quarter. This despite revenues shrinking.
    • Revenue shrank because firms aggressively cut costs, including employee compensation.
    • This implies that if listed company profits are growing 25 per cent, and yet GDP contracted 7.5 per cent, it reveals (by construction) significant pressure on profits of unlisted SMEs, wages and employment.
    • Labour market pressures are evident in India too.
    • Household demand for MGNREGA remains very elevated, suggesting significant labour market slack.
    • The employment rate in some labour market surveys still reveal about 14 million fewer employed compared to February, and nominal wage growth across a universe of 4,000 listed firms has slowed from about 10 per cent to 3 per cent over the last six quarters.

    Why this matters

    • It may be rational for any one firm to boost profits by cutting employee compensation.
    • But if every firm pursued that strategy, that simply reduces future aggregate demand and profitability for all firms.
    • This is quintessential fallacy of composition that Keynes enumerated.
    • Weak demand, in turn, disincentivises re-hiring, reinforcing the risks of settling into a sub-optimal equilibrium.

    Need to remain vigilant about labour market

    • Remaining vigilant about labour markets is particularly important for India.
    • Private consumption was increasingly financed by households running down savings and taking on debt pre-COVID-19.
    • Consequently, if job-market pressures induce households into perceiving this shock as a quasi-permanent hit on incomes, households will be incentivised to save, not spend in the future.

    Way forward for fiscal consolidation

    • While economic momentum is expected to slow as pent-up demand wears off, the level of output will progressively reach pre-COVID levels as the economy normalises.
    • The question is what will drive growth after that?
    • India’s fiscal response has been restrained thus far, with the Centre’s total spending similar to last year and state capex under pressure.
    • It’s therefore important for the Centre to step up spending in the remaining months.
    • More importantly, public investment, and a large infrastructure push, must be the leitmotif of the next budget.
    • This will be crucial to boost demand, create jobs, crowd-in private investment and improve the economy’s external competitiveness.
    • If higher infrastructure spending is financed by higher asset sales, the headline fiscal deficit (which matters for bond markets and interest rates) can be slowly reduced, even as the underlying fiscal impulse (which matters for growth and jobs) remains positive.
    • This is the only way to undertake fiscal consolidation without incurring a fiscal drag.
    • Monetary policy has led the charge in 2020. But with inflation continuing to remain sticky and elevated, the RBI has fewer degrees of freedom going forward.

    Conclusion

    The stronger-than-expected GDP print is very encouraging. But this is the start of a long journey back. Much, therefore, remains to be done. The excitement around the vaccine shouldn’t obscure this fundamental premise.

  • What are Municipal Bonds?

    Bonds issued by the Lucknow Municipal Corporation (LMC) got listed on the Bombay Stock Exchange. It’s the ninth city in the country to raise capital through municipal bonds.

    Find out the rest eight cities issuing Municipal Bonds in India. Do let us know in the comment box.

    What are Municipal Bonds?

    • A municipal bond or muni bond is a debt instrument issued by municipal corporations or associated bodies.
    • These local governmental bodies utilise the funds raised through these bonds to finance projects for socio-economic development through building bridges, schools, hospitals, providing proper amenities to households, et al.
    • Such bonds come with a maturity period of three years, whereby municipal corporations provide returns on these bonds either from property and professional tax collected or from revenues generated from specific projects or both.
    • The Securities and Exchange Board of India (SEBI) revised the guidelines related to the issuance of municipal bonds in 2015 in an attempt to enable ULBs or local government bodies to raise finances from such sources.
    • Following this measure, different cities have capitalized on the new guidelines to fund initiatives such as Atal Mission for Rejuvenation and Urbanisation Transformation (AMRUT) and Smart Cities Mission.

    Their types

    There are primarily two types of municipal bonds in India, categorised as per their usage. These are –

    (1) General Obligation Bonds

    • These are issued to raise finances for general projects such as improving the infrastructure of a region.
    • Repayment of the bond, along with interest, is processed through revenue generated from different projects and taxes.

    (2) Revenue Bonds

    • These are issued to raise finance for specific projects, such as the construction of a particular building.
    • Repayment of such bonds (principal and accrued interest) shall be paid through revenues explicitly generated from the declared projects.

    Advantages of such Bonds

    There are multiple advantages of investing in municipal bonds which include –

    (1)Transparency

    Municipal bonds that are issued to the public are rated by renowned agencies such as CRISIL, which allows investors transparency regarding the credibility of the investment option.

    (2)Tax benefits

    In India, municipal bonds are exempted from taxation if the investor conforms to certain stipulated rules. In addition to such conformation, interest rates generated on such investment tools are also exempt from taxation policy.

    (3) Minimal risk

    Municipal bonds are issued by municipal authorities, implying involvement of minimal risk with these securities.

    Their limitations

    The disadvantages of municipal bonds are enumerated below –

    (1) Long maturity period

    • Municipal bonds come with a lock-in period of three years, imposing a burden on the liquidity requirements of investors.

    (2) Low-interest rates

    • Even though interest rates on municipal bonds, in some cases, are higher than other debt instruments, these rates are considerably low when compared to returns from market-linked financial instruments such as equity shares.

  • Operation Trident and its significance

    Every year, India celebrates December 4 as Navy Day to commemorate Operation Trident – a key offensive during the 1971 India-Pakistan War. This year, it is the 50th anniversary of the victory in the 1971 War.

    This newscard is crucial for the CAPF aspirants. It hardly holds any importance for CS prelims. But the grit, glory and honour of our armed forces is a matter of pride that every CS aspirants should know.

    Operation Trident

    • The India-Pakistan War of 1971 had begun on December 3, when the Pakistan Air Force launched pre-emptive strikes on airfields in Western India.
    • Following the Battle of Longewala, the Indian Navy inflicted heavy damage on Pakistani vessels in Karachi harbour.
    • India responded by formally declaring war in the wee hours of December 4.
    • On December 4, under Operation Trident, the Indian Navy sank three vessels near the Pakistani port city of Karachi.
    • The Indian Air Force also played a crucial role, when Karachi’s Kemari oil tanks were strafed by the IAF on the same day in an independent operation which it did not claim.

  • Places in news: Bhashan Char Island

    Bangladesh has transported more than 1,600 Rohingya refugees to a low-lying island in the first phase of a controversial planned relocation of 1,00,000 people.

    Can you see, what the so-called champions of tolerance and human rights doing to the refugees in their own country!

    Bhashan Char Island

    • Bhasan Char also known as Char Piya, is an island in Hatiya, Bangladesh.
    • Located 34 kilometres (21 miles) from the mainland, its name in Bengali means “floating island.”
    • The island was formed with Himalayan silt in 2006 spanning 40 square kilometres.
    • It is underwater from June to September annually because of the monsoon, and it has no flood fences.
    • In June 2015, the Bangladeshi government suggested resettling Rohingya refugees on the island under its Ashrayan Project.
    • The proposal was characterized by the UN Refugee Agency as “logistically challenging”.

    Extraditing to another hell

    • Bhashan Char is a flood-prone island that emerged from the sea 20 years ago.
    • The refugees had been coerced into going to this flood-prone island which is also vulnerable to frequent cyclones.
    • This compact island is too small to occupy and nurture the Rohingya population and there is chronic overcrowding in camps.

  • Lottery, gambling, betting taxable under GST Act

    The Supreme Court has held that lottery, gambling and betting are taxable under the Goods and Services Tax (GST) Act.

    Try this question from CSP 2018:

    Q.Consider the following items:

    1. Cereal grains hulled
    2. Chicken eggs cooked
    3. Fish processed and canned
    4. Newspapers containing advertising material

    Which of the above items is/are exempt under GST (Goods and Services Tax)?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

    What did the court say?

    • A three-judge Bench led by Justice Ashok Bhushan said the levy of GST on lotteries does not amount to “hostile discrimination”.
    • The court held that lottery, betting and gambling are “actionable claims” and come within the definition of ‘goods’ under Section 2(52) of the Central Goods and Services Tax Act, 2017.
    • Lottery, betting and gambling are well known concepts and have been in practice in this country since before Independence and were regulated and taxed by different legislations.

    Parliament to decide

    • The court said that the Parliament had an absolute power to go for an “inclusive definition” of the term ‘goods’ to include actionable claims like lottery, gambling and betting.
    • The court accepted the government’s stand that the Parliament has the competence to levy GST on lotteries under Article 246A (inserted after GST Act) of the Constitution.
    • The power to make laws as conferred by Article 246A fully empowers the Parliament to make laws with respect to GST and expansive definition of goods given in Section 2(52).

    Must read:

    Goods and Services Tax

  • Issues related to disability

    Legal provisions not turning into reality through their implementation adds to the difficulties faced by persons with disabilities. The article deals with the idea of enabling persons with disability to contribute to society.

    Context

    • December 3 is the annual International Day of Persons with Disabilities, it is also a stark reminder of how far we in India need to go in meeting the needs of the disabled.

    Lack of implementation of provisions

    • The World Bank estimates that there may be well over 40 million Indians living with disabilities.
    • The Rights of Persons with Disabilities Act was passed in 2016 but our country is still largely devoid of ramps on its footpaths or government buildings.
    • The law promises them equality of opportunity and accessibility. Our practices deny them what the law promises.

    Challenges faced by persons with disabilities

    • Indians with disabilities are far more likely to suffer from poor social and economic development.
    •  45 per cent of this population is illiterate, making it difficult for them to build better, more fulfilled lives.
    • This is compounded by the community’s lack of political representation:
    • In our seven decades of independence, we have had just four parliamentarians and six state assembly members who suffer from visible disabilities.
    • This lack of representation, and these general attitudes, translate directly into policy that undermines the well-being of people with disabilities.
    •  Last year, for example, the government inexplicably decided to depart from convention and render people suffering from cerebral palsy ineligible for the Indian Foreign Service.

    Initiatives and steps taken by the government

    • The government has had some admirable initiatives to improve the lot of Indians with disabilities, such as the ADIP scheme for improving access to disability aids.
    • The Sugamya Bharat Abhiyan, or Accessible India Campaign, has aimed to make public transport, buildings and websites more accessible.
    • In 2017, the Mental Healthcare Act recognised and respected the agency of persons with mental-health conditions, expanding the presence of mental-health establishments across the country, restricted the harmful use of electroshock therapy, clarified the mental-health responsibilities of state agencies such as the police, and effectively decriminalised attempted suicide.
    •  In 2007, the UN passed the Convention on the Rights of Persons with Disabilities.
    • India is a state party to the convention.

    Conclusion

    It is critical that the government work with civil society and individuals with disabilities to craft an India where everyone feels welcome and treated with respect, regardless of their disabilities. Only then can we welcome the next International Day of Persons with Disabilities without a sense of shame.

  • Implications of UP’s ‘love jihad’ ordinance for freedom of conscience

    The U.P. government’s ordinance seeking the prevention of illegal conversion has several provisions that go against the Constitution and restricts the freedom of conscience. 

    Objective of the ordinance

    • The Uttar Pradesh Prohibition of Unlawful Conversion of Religion Ordinance, 2020 seeks to prevent “love jihad” in the state
    • The ordinance makes it a criminal offence for a person to convert another by coercion, misrepresentation, fraud etc, which is unobjectionable.
    • A marriage solemnised for the “sole purpose” of unlawfully converting the bride or the groom is required to be declared void by the competent court.
    • There can be no objection to ordinance’s premise that converting somebody by fraud or misrepresentation is wrong.
    • In fact, though the members of the Constituent Assembly included the right to “propagate” one’s religion they considered it a “rather obvious doctrine” that this would not include forcible conversions.
    • However, the UP ordinance goes beyond this principle and does something quite strange.

    Unconstitutional provisions and issues with the ordinance

    1) Lack of clarity

    • The ordinance makes it a criminal offence to convert a person by offering her an “allurement”.
    • The term “allurement” is defined very broadly, to include even providing a gift to the person who is sought to be converted.
    • The use of the words “or otherwise” in the definition of allurement is puzzling.
    • The essential prerequisite of a criminal law is that it has to be precise.
    • A person cannot be put behind bars for doing something that a penal law does not clearly and unequivocally prohibit.
    • On this touchstone, the definition of “allurement” leaves much to be desired.

    2) Reconversion to a person’s previous religion is not illegal

    • It says that “reconversion” to a person’s previous religion is not illegal, even if it is vitiated by fraud, force, allurement, misrepresentation and so on.
    • In other words, if a person converts from Religion A to Religion B of her own volition, and is then forced to reconvert back to Religion A against her will, this will not constitute “conversion” under the ordinance at all.

    3) Unfairly treating all women in the same way

    • Illegal conversion under the ordinance attracts a punishment of 1-5 years in prison.
    • However, if the victim of the illegal conversion is a minor, a member of the Scheduled Castes or Scheduled Tribes or, strangely, a woman, the punishment is doubled — at 2-10 years behind bars.
    • In other words, it does not matter who the woman is, if somebody converts her against her will, the punishment can go up to 10 years in prison.
    • The ordinance unfairly paints all women with the same brush — assuming that all women are gullible, vulnerable and especially susceptible to illegal conversion.

    4) Buden of proof

    • The burden of proof in criminal cases is on the prosecution, and the presumption is that a person accused of committing an offence is innocent until proven guilty.
    • The Uttar Pradesh ordinance turns this rule on its head.
    • Every religious conversion is presumed to be illegal.
    • The burden is on the person carrying out the conversion to prove that it is not illegal.
    • The offence of illegal conversion is also “cognisable” and “non-bailable”, meaning that a police officer can arrest an accused without a warrant, and the accused may or may not be released on bail, at the discretion of the court.

    Time to revisit the past judgement

    • In Rev Stainislaus v State of Madhya Pradesh (1977), the Supreme Court held that the fundamental right to “propagate” religion does not include the right to convert a person to another religion.
    • In that case, the court had upheld anti-conversion statutes enacted by the states of Orissa and Madhya Pradesh.

    Conclusion

    The ordinance puts an incredible chilling effect on the freedom of conscience and state must reconsider it.

  • Right to Marriage is a Fundamental Right

    An individual’s right to marry a person of his or her choice is a fundamental right that cannot be denied on the basis of caste or religion by anybody, re-iterated the Karnataka High Court.

    Discuss the various ethical and rights issues involved in interfaith marriages.

    Right to Marriage

    • The right to marry is a part of the right to life under Article 21 of the Indian Constitution.
    • The right to marriage is also stated under Human Rights Charter within the meaning of the right to start a family.
    • The right to marry is a universal right and it is available to everyone irrespective of their gender.
    • Various courts across the country have also interpreted the right to marry as an integral part of the right to life under Article 21.
    • A forced marriage is illegal in different personal laws on marriage in India, with the right to marry recognized under the Hindu laws as well as Muslim laws.

    Other laws that lay down a person’s right to marry in India are:

    1. The Prohibition of Child Marriage Act, 2006
    2. The Guardians and Wards Act, 1890
    3. The Majority Act, 1875
    4. The Family Courts Act, 1984
    5. The Protection of Women from Domestic Violence Act, 2005

    Back2Basics: Scope of Article 21

    • Article 21, considered the heart and soul of the Constitution, states, ‘No person shall be deprived of his life or personal liberty except according to the procedure established by law.

    It has a much more profound meaning that signifies the:

    • Right to live with human dignity
    • Right to livelihood
    • Right to health
    • Right to pollution-free air
    • Right to live a quality life
    • Right to go abroad
    • Right to privacy
    • Right against delayed execution,

    And anything and everything that fulfils the criteria for a dignified life.

  • Jadav Payeng: The Forest Man of India

    Jadav Payeng, known as ‘The Forest Man of India’, takes us through his journey of grit that saw a desert turning into a forest. His story is been depicted through an upcoming trilingual film.

    We knew about the mountain man in India. We have also had the Forest Man of India who is also a living inspiration for successful afforestation. We can quote such examples in essays very well.

    Who is Jadav Payeng?

    • Jadav “Molai” Payeng (born 1963) is an environmental activist and forestry worker from Majuli Island popularly known as the Forest Man of India.
    • He was born in the indigenous Mising tribe of Assam.
    • Over the course of several decades, he has planted and tended trees on a sandbar of the river Brahmaputra turning it into a forest reserve.
    • The forest, called Molai forest after him is located near Kokilamukh of Jorhat, Assam, India and encompasses an area of about 1,360 acres / 550 hectares.
    • In 2015, he was honoured with Padmashri, the fourth highest civilian award in India.

    His work

    • The forest, which came to be known as Molai forest, now houses Bengal tigers, Indian rhinoceros, and over 100 deer and rabbits.
    • Molai forest is also home to elephants and several varieties of birds, including a large number of vultures.
    • Bamboo covers an area of over 300 hectares.

  • [pib] E-Sanjeevani Telemedicine Service

    In a landmark achievement, eSanjeevani, Health Ministry’s national telemedicine initiative today completed 9 lakh consultations.

    Although telemedicine brings with it many benefits, there are some downsides to it as well. Discuss.

    What is E-Sanjeevani?

    • Ministry of Health & Family Welfare has launched two variants of eSanjeevani namely – doctor to doctor (eSanjeevani AB-HWC) in the hub and spoke model and patient to doctor (eSanjeevaniOPD).
    • E-Sanjeevani OPD (out-patient department) is a telemedicine variant for the public to seek health services remotely; it was rolled out on 13th of April 2020 during the first lockdown in the country.
    • It enables virtual meetings between the patients and doctors & specialists from geographically dispersed locations, through video conferencing that occurs in real-time.
    • At the end of these remote consultations, eSanjeevani generates electronic prescriptions which can be used for sourcing medicines.
    • Andhra Pradesh was the first state to roll out eSanjeevani AB-HWC services in November 2019.

    Benefits of telemedicine

    Telemedicine benefits patients in the following ways:

    • Transportation: Patients can avoid spending gas money or wasting time in traffic with video consultations.
    • No missing work: Today, individuals can schedule a consultation during a work break or even after work hours.
    • Childcare/Eldercare Challenges: Those who struggle to find care options can use telemedicine solutions.